Wills and Estates: 09 September 2022
Author: Jack Conway - Our People
Vale Queen Elizabeth II. There are important lessons that can be recognised in how Queen Elizabeth II's legacy will pass to the next generation.
News arrived this morning of the passing of the British monarch and Australia's Head of State, Her Majesty, Queen Elizabeth II. Aitken Partners joins all Australians and the rest of the world in mourning the loss of a remarkable and cherished figure.
As lawyers, we frequently assist families following the loss of a loved one. While the Queen may seem a world apart from most ordinary Australians, there are important lessons that can be recognised in how her legacy will pass to the new generation.
The British Monarchy holds around $28 billion in real estate assets as of 2021, including Buckingham Palace and various other estates. These assets are held by the 'Royal Firm', or the Monarchy PLC. These assets are not owned by the Queen directly, and so accordingly, will not pass on via her will but will remain assets of the Royal Firm and continue to be managed by a group of members of the royal family.
While most Australians won't control wealth of this size, many have set up companies or family trusts to run businesses or hold investments. These can sometimes hold the majority of a family's wealth, and will not be dealt with by the wills of the parents. Careful planning needs to take place to ensure that the management of these entities after the death (or incapacity) of the parents is considered and taken into account.
A lesson to be learned from the Royal Firm is that control is not centred on a single person but has been shared among many family members. When transitioning control of an entity like a trust or company after a person's death, it is much smoother and less likely to cause dispute, where the persons receiving control have been introduced at an early stage and educated on how to manage the wealth.
The Queen's personal wealth (a paltry $500 million of property, investments and artworks) is expected to pass to King Charles III.
Inheritance tax in the UK can equate to around 40% of a person's estate and is a significant issue for UK residents and persons owning UK assets. Luckily for the royal family, they are exempt from paying inheritance tax.
In Australia, there is no inheritance tax, and our probate duties were all abolished many years ago. However, there are very often tax implications for a deceased estate when selling assets, distributing income or receiving superannuation benefits, and these should always be considered in planning your estate.
Unlike most wills, the Queen's will won't be a public document for 90 years after her death.
However, in most cases for members of the public, a will becomes a public document once it has been sent to the Court to obtain a grant of probate. Additionally, an inventory of your assets and liabilities at the date of your death will be available for public inspection (upon application to the Court).
For persons for whom privacy is an issue, wills are often not the best tool. Consideration can be given to holding assets in a different way, such as through a trust, as these assets do not need to be disclosed as part of a probate application.